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OIL EXPRESS NAT'L, INC. v. BURGSTONE

March 3, 1997

OIL EXPRESS NATIONAL, INC., Plaintiff,
v.
THOMAS P. and LINDA G. BURGSTONE, ILLINOIL, INC., RONALD D. KELLEY, LISA M. KELLEY, KELLEY PARTNERS, INC., MICHAEL G. STRICK, PAULA STRICK and STRICK ENTERPRISES, INC., Defendants/Counterclaimants, v. DAN BARNAS, Third-Party Defendant.



The opinion of the court was delivered by: KOCORAS

 CHARLES P. KOCORAS, District Judge:

 This matter is before the court on the plaintiff's motion to dismiss several of the defendants' counterclaims for failure to state a claim upon which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). For the reasons set forth below, this motion is granted in part and denied in part.

 BACKGROUND

 Oil Express National, Inc. ("Oil Express") is a quick oil change franchisor based in Hindsdale, Illinois. The defendants in this case (collectively "defendants") are all residents of Illinois who have contracted with Oil Express to operate one or more franchises. The franchise agreements allowed the defendants to use such things as Oil Express' intellectual property, including trademarks and service marks, and the distinctive shape of Oil Express' franchise buildings. It also obligated the defendants to make certain payments to Oil Express, including royalty payments and payments for advertising. At some unspecified time, the defendants discontinued remitting the required fees to Oil Express, in violation of their agreement. As such, their franchise agreements have been terminated and Oil Express instituted the present suit against them, alleging a variety of claims.

 On October 13, 1996, we partially granted a motion by the defendants to dismiss several counts of the complaint against them, as well as several of the defendants for insufficient service of process. On December 12, 1996, the defendants filed a variety of counterclaims against Oil Express. These claims include: 1) breach of contract; 2) rescission; 3) breach of implied covenant of good faith and fair dealing; 4) breach of fiduciary duty; 5) accounting; 6) breach of third-party beneficiary contract; and 7) violations of the Illinois Franchise Disclosure Act of 1987, 815 ILCS 705/1 et seq., Oil Express presently moves to dismiss several of these counts for failure to state a claim upon which relief can be granted. Before we turn to the merits of this motion, we will briefly outline the legal standard which guides our inquiry.

 LEGAL STANDARD

 The purpose of a motion to dismiss pursuant to Rule 12(b)(6) is to test the sufficiency of the complaint, not to decide the merits of the case. Defendants must meet a high standard in order to have a complaint dismissed for failure to state a claim upon which relief may be granted. In ruling on a motion to dismiss, the court must construe the complaint's allegations in the light most favorable to the plaintiff and all well-pleaded facts and allegations in the plaintiff's complaint must be taken as true. Bontkowski v. First National Bank of Cicero, 998 F.2d 459, 461 (7th Cir.), cert. denied, 510 U.S. 1012, 126 L. Ed. 2d 567, 114 S. Ct. 602 (1993). The allegations of a complaint should not be dismissed for failure to state a claim "unless it appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957). See also Hartford Fire Insurance Co. v. California, 509 U.S. 764, 125 L. Ed. 2d 612, 113 S. Ct. 2891 (1993); Sherwin Manor Nursing Center Inc. v. McAuliffe, 37 F.3d 1216, 1219 (7th Cir. 1994), cert. denied, U.S. , 133 L. Ed. 2d 113, 116 S. Ct. 172 (1995). Nonetheless, in order to withstand a motion to dismiss, a complaint must allege facts sufficiently setting forth the essential elements of the cause of action. Lucien v. Preiner, 967 F.2d 1166, 1168 (7th Cir.), cert. denied, 506 U.S. 893, 121 L. Ed. 2d 196, 113 S. Ct. 267 (1992).

 In reviewing a Rule 12(b)(6) motion to dismiss for failure to state a claim, the court is limited to the allegations contained in the pleadings themselves. Documents incorporated by reference into the pleadings and documents attached to the pleadings as exhibits are considered part of the pleadings for all purposes. Fed.R.Civ.P. 10(c). In addition, "documents that a defendant attaches to a motion to dismiss are considered a part of the pleadings if they are referred to in the plaintiff's complaint and are central to her claim." Venture Associates Corp. v. Zenith Data Systems Corp., 987 F.2d 429, 431 (7th Cir. 1993). It is with these principles in mind that we turn to the motion before us.

 DISCUSSION

 In its motion, Oil Express seeks to dismiss Counterclaims III, IV, V, and VI for failure to state a claim upon which relief can be granted. We will discuss the application of this motion to each of these counterclaims below.

 I. Count III

 Count III of the defendants' Counterclaim asserts a cause of action for breach of an implied duty of good faith and fair dealing. Oil Express moves to dismiss this count, arguing that Illinois does not recognize an independent cause of action based on the breach of such a duty. Because this argument is without merit in this case, we must deny Oil Express' motion with respect to this count.

 In Illinois, a covenant of good faith and fair dealing is implied in every contract. Scherer v. Rockwell Int'l Corp., 975 F.2d 356, 360 (7th Cir. 1992), citing Foster Enterprises Inc. v. Germania Federal Savings and Loan Assoc., 97 Ill. App. 3d 22, 421 N.E.2d 1375, 52 Ill. Dec. 303 (Ill.App. 1981). See also 810 ILCS 5/1-203 (imposing a good-faith obligation on every contract under the Uniform Commercial Code). It is established that this duty has "never been an independent source of duties for the parties to a contract. ...


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